Sturm, Ruger & Company, Inc. · NYSE:RGR
Sturm, Ruger & — Q2 2010 Earnings Presentation
51 slides from Sturm, Ruger &'s earnings presentation, Aug 2, 2010
Slide 1: Q2 2010 Earnings Conference Call
STURM, RUGER & CO., inc. @2 2010 Earnings Conference Call July 29, 2010 9:00 a.m. EDT s RUGER
Slide 2: Cautionary Statement
W CAUTIONARY STATEMENT “Statements made in the course of this presentation that state the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company’s actual results could differ materially
Slide 3: Q2 2010 Earnings Conference Call
STURM, RUGER & CO., inc. @2 2010 Earnings Conference Call July 29, 2010 9:00 a.m. EDT s RUGER
Slide 4: Distributor Sell-through vs. Bookings
Distributor Sell-through vs. Bookings 600,000 500,000 400,000 300,000 200,000 100,000 Qe Q2. BAS | QE QZ QVB_= QA | QE = Q2 QB QF QL Q 2007 2008 2009 2010 “Distributor Sell-through "Bookings 2» Q2 2010 Earnings Conference Call 7/29/10 ARMS MAKERS FOR RESPONSIBLE CITIZENSS RUGER
Slide 5: Company and Distributor Finished Goods Inventory
Company and Distributor Finished Goods Inventory 350,000 300,000 250,000 © : . ~ 200,000 Units 150,000 100,000 50,000 2002 2003 2004 2005 : : Q2 2010 Earnings Conference Call 7/29/10 ARMS MAKERS FOR RESPONSIBLE CITIZENSS RUGER 2007 2008 2010
Slide 6: Q2 2010 Earnings Conference Call
STURM, RUGER & CO., inc. @2 2010 Earnings Conference Call July 29, 2010 9:00 a.m. EDT s RUGER
Slide 7: Thomson StreetEvents Conference Call Transcript
Final Transcript Thomson StreetEvents Conference Call Transcript RGR - Q2 2010 Sturm Ruger Earnings Conference Call Event Date/Time: Jul 29, 2010 / 01:00PM GMT 1 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribut
Slide 8: Corporate and Conference Call Participants
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call CORPORATE PARTICIPANTS Mike Fifer Sturm, Ruger & Company - President, CEO Kevin Reid Sturm, Ruger & Company, Inc. - General Counsel CONFERENCE CALL PARTICIPANTS Scott Hamann Keybanc Capital Markets - Anal
Slide 9: Forward-looking statements
I know this is standard, but we really want to emphasize that statements made in the course of this presentation that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future, are forward-looking statements. It's important to note that the Company's a
Slide 10: Second quarter 2010 results remarks
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings incl
Slide 11: NICS checks and consumer demand
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Fourth, the National Instant Criminal Background Check System background check numbers, known as NICS checks, had been stronger since the presidential election than they were before the election, which li
Slide 12: THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and t
Slide 13: Question and Answer
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call QUESTION AND ANSWER Operator Absolutely. (Operator Instructions). Our first question comes from the line of Scott Hamann with Keybanc Capital Markets. Please proceed. Scott Hamann - Keybanc Capital Market
Slide 14: Retailer inventory
in inventory. And then at the late summer, they got just inundated with them, particularly the retailers who bought some buying groups. They largely didn't get their buying group orders through the first part of the year and then they just got buried. And as you know, you got a couple pallets worth
Slide 15: Ammunition and product reorders
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call We've made some progress on working that down, but now a similar thing has just happened with ammo where ammo is very, very scarce and they couldn't get it and they couldn't get it. And retailers often fo
Slide 16: Bret Jordan - Avondale Partners - Analyst THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact
Bret Jordan - Avondale Partners - Analyst 6 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent
Slide 17: SR-9 compact and new product timing
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Usually, you may have trouble keeping them in stock right now because of the popularity? Mike Fifer - Sturm, Ruger & Company - President, CEO Well, I think the hardest gun to get in America right now is o
Slide 18: Labor content and manufacturing
labor than stainless steel, and where the new products tend to have very little labor content to them. So over time, even I think if volumes decline, we'll be making some progress with the shift towards newer products maybe with more modern manufacturing techniques that require less individual gunsm
Slide 19: Compact gun sell-through
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Bret Jordan - Avondale Partners - Analyst All right, thank you. Operator Our next question comes from the line of Brian Rafn with Morgan Dempsey Capital. Brian Rafn - Morgan Dempsey Capital - Analyst Yes,
Slide 20: Brian Rafn - Morgan Dempsey Capital - Analyst THOMSON REUTERS STREETEVENTS | www.streetevents.com |
Brian Rafn - Morgan Dempsey Capital - Analyst 8 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written con
Slide 21: Mini foundries
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Okay. You guys also talked about, and correct me if I'm wrong, about developing kind of mini foundries on the factory floor. How is that process going? Mike Fifer - Sturm, Ruger & Company - President, CEO
Slide 22: Product development timeline
Okay. So with all the rapid prototyping and all the design, you mentioned the newer guns having less labor content, is it still a couple of years or give me a sense as to what that, from conceptualization to actually getting that gun out to the wholesaler? What is that, months, years? 9 THOMSON REUT
Slide 23: Product design and testing
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Mike Fifer - Sturm, Ruger & Company - President, CEO It's a year longer than we plan. Brian Rafn - Morgan Dempsey Capital - Analyst Okay. Mike Fifer - Sturm, Ruger & Company - President, CEO And a lot of
Slide 24: Flexible cell lines
Okay. When you look at the factory floor, and you talk about getting out of your old batch processing, you're talking about your flexible cell lines, are you running at all of these incremental product iterations with the SR-9, now the SR-9 compact? Are you running multiple gun frame designs within
Slide 25: Manufacturing cells
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Mike Fifer - Sturm, Ruger & Company - President, CEO To the extent that the smaller-size cells tend to be more specialized, as we batch them together and create super-cells, then it tends to be more of a
Slide 26: New products and line extensions
That tends to be that the junior guys cut their teeth on the line extensions and the new calibers and the more capable folks are truly dedicated to new products. 11 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistri
Slide 27: M&A pricing
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Brian Rafn - Morgan Dempsey Capital - Analyst Okay. And then one final one, Mike, on the M&A area, are you finding any attractive candidates? Are you looking at -- and maybe talk a little bit about how yo
Slide 28: Investment castings business
Mike Fifer - Sturm, Ruger & Company - President, CEO The nature of the investment castings business is the following. If you have an investment casting need that's not controlled by ITAR, it's not sort of a defense industry related, it's not something that has exceptional precision required like in
Slide 29: Investment casting outlook
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call If, on the other hand, like in firearms, you have ITAR regulations and you can't go to China to get it, or if you really desperately need it in three weeks or it's really a part that has very close heat t
Slide 30: Okay. Okay. Is your project on that [door] building, is that completed? I think
Okay. Okay. Is your project on that [door] building, is that completed? I think you're -- 13 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means
Slide 31: Facility and product questions
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Mike Fifer - Sturm, Ruger & Company - President, CEO Almost completely finished. We still got to do a little bit of fencing and maybe some minor landscaping and extra security work. But if you drive by th
Slide 32: Hey, Steve. Stephen Merkel Private Investor THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
Hey, Steve. Stephen Merkel Private Investor 14 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written cons
Slide 33: Personal protection market
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Just maybe some comments on the personal protection market. A lot of the new products are focused on that, but as you're seeing it now as far as just expansion? Mike Fifer - Sturm, Ruger & Company - Presi
Slide 34: Personal protection demand
And so I took that as a sign of, well, largely the politically driven surge is over. However, because of -- I think the economy and other concerns, the personal protection market is still very strong. Folks are still interested in defending themselves. And so that guns that address that need seem to
Slide 35: NICS checks and demand level
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Now the second part of your question on why do I think maybe it's settled at a higher level. Several factors come together to make me draw that conclusion. One is NICS checks. NICS checks are not a direct
Slide 36: Scott Hamann - Keybanc Capital Markets - Analyst At that 36%, right? THOMSON REUTERS
Scott Hamann - Keybanc Capital Markets - Analyst At that 36%, right? 16 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited witho
Slide 37: Compensation expense
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Mike Fifer - Sturm, Ruger & Company - President, CEO Correct. Scott Hamann - Keybanc Capital Markets - Analyst Okay. And then in terms of the lower year-over-year comp expense, I know that's probably hard
Slide 38: THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
17 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' an
Slide 39: Heller and McDonald rulings
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Please proceed. Mark Close - Oppenheimer & Close - Analyst Good morning, Mike. I know what probably take time to see what happens. But with sort of the back-to-back Heller and McDonald rulings, would you
Slide 40: Mike Fifer - Sturm, Ruger & Company - President, CEO And then we do
Mike Fifer - Sturm, Ruger & Company - President, CEO And then we do much, much better with it. Because even if you can't get it, if your buddy's got one and he'll take you to the range and let you shoot it, then you'll hold out to get one yourself. But if none appear in the first six months, a lot o
Slide 41: Ancillary acquisitions
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Brian Rafn - Morgan Dempsey Capital - Analyst Sure. Okay. And relative to your comments on M&A relative to pricing being ridiculous with compressions and earnings power, you had mentioned in the past, you
Slide 42: But I'm looking for it. Mike Fifer - Sturm, Ruger & Company - President,
But I'm looking for it. Mike Fifer - Sturm, Ruger & Company - President, CEO Now remember all those forward-looking caution statements? 19 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters
Slide 43: Military contracts
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Bret Jordan - Avondale Partners - Analyst I do, yes. Mike Fifer - Sturm, Ruger & Company - President, CEO And I honestly, I have no idea. But given all that, maybe the M4 upper replacement contracts from
Slide 44: Retailer range programs
Chris Harrell - Verity Investment Management Group - Analyst Hey, Mike. Good morning. I had a question about the sampling in range programs that some retailers have. I wonder, if you can just help me understand how many retailers actually have these programs or how prevalent it is maybe anecdotally
Slide 45: Retailer range programs
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Mike Fifer - Sturm, Ruger & Company - President, CEO I don't think there's that many out there. I have -- I don't have the number at my fingertips. But there are several hundred ranges out there affiliate
Slide 46: THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
21 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' an
Slide 47: Acquisition multiples and buybacks
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call Daniel Koslowski Private Investor Hello, Mike. Mike Fifer - Sturm, Ruger & Company - President, CEO Hi, Dan. Daniel Koslowski Private Investor Thanks for doing the call. A quick question for you, regardin
Slide 48: Buyback and market cap
But what I'm observing on multiples to folks we talk to, they're expecting that they should get at least 10 on these acquisition targets, which is just absurd. And I guess, if cash builds up too much or that our stock price goes much lower, we'll be buying it back. My preference would be frankly to
Slide 49: Buyback and shareholder value
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call So if I go buy $20 million worth of stock back, I've just reduced our market cap another 20 million bucks and I'm that much farther away from a market cap that allows everybody else to participate in Ruge
Slide 50: Slide 50
Slide 51: Disclaimer
Final Transcript Jul 29, 2010 / 01:00PM GMT, RGR - Q2 2010 Sturm Ruger Earnings Conference Call DISCLAIMER Thomson Reuters reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls